Bloomberg News

China Says Wal-Mart’s Inspections Missed Fox Sold as Donkey (1)

January 06, 2014

Wal-Mart Store

Pedestrians walk past a Wal-Mart Stores Inc. store in the Shekou district of Shenzhen. Photographer: Brent Lewin/Bloomberg

Wal-Mart Stores Inc. (WMT:US) didn’t properly inspect products it purchased in China, leading to fox DNA being found in meat sold as donkey, the state-owned radio broadcaster reported, citing the provincial food regulator.

The Shandong Food and Drug Administration told Wal-Mart to compensate the people affected and establish a DNA testing system for food as quickly as possible, the China National Radio said yesterday, citing meetings between executives and the agency.

Bentonville, Arkansas-based Wal-Mart said in a statement on Jan. 2 that it withdrew all products made by Dezhou Fujude Food Co., will start DNA testing of meat it sells in China and will compensate customers who bought the affected meat. The Shandong food regulator told retailers on Dec. 29 to stop selling a donkey meat product made by Fujude.

China has vowed to crack down on food safety violations as contamination of products from baby formula to mutton has sparked consumer outrage. Shanghai police last year busted a ring selling fox and mink meat as mutton, leading the government to order local authorities to tighten scrutiny of the production and sale of meat products.

In 2011, police arrested Wal-Mart workers in the southwestern city of Chongqing amid a probe of allegations the retailer mislabeled ordinary pork as organic. The employees were later released. The incident forced the company to close its stores in the city for about two weeks and pay fines.

Investment

Last year, Wal-Mart said it would invest 100 million yuan ($16.5 million) over three years to upgrade food safety in China by adding a mobile food-inspection program and increasing supplier training.

The retailer is also closing less profitable stores and revamping business units in China amid increasing competition from regional rivals Sun Art Retail Group Ltd. (6808) and China Resources Enterprise Ltd. (291) The U.S. retailer has been battling setbacks in emerging markets including the end of a six-year partnership in India with local billionaire Sunil Mittal.

Sun Art is China’s largest hypermarket operator, with a 14 percent share of the 574 billion yuan ($95 billion) industry in 2012, according to Euromonitor International. Wal-Mart and China Resources were tied for second place with an 11 percent share each.

To contact Bloomberg News staff for this story: Liza Lin in Shanghai at llin15@bloomberg.net

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net


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